Question

Government regulations can increase _____, making goods and services more expensive.

Answer 1

I would say production costs would be the answer

Answer 2

Production costs can be affected in several ways by the decition a government makes, since this  is defined as the costs incurred in order to make/produce goods and in several parts of the process the government is involved, for example taxes and work laws.

Correct answer is A.) production costs

In a more literal example, a government can establish a law that states the hour of work in a certain part of the process of producing chocolates has to be paid at a higher rate, this will affect the overall production cost.